As we begin reviewing our company’s shipping metrics from last year, we find ourselves trying to analyze bits and pieces of data from various sources and multiple carriers which are equivalent to a stack of digital cocktail napkins.
Most shippers quickly recognize they do not have the tools to perform a proper analysis of our carriers. Without data nor accurate metrics, most shippers are dependent upon our incumbent carriers providing their own carrier scorecards which inevitably reveal their service was an astounding 99.9% on time.
At the same time shippers are admiring the service results reported by our carriers, most shipping executives are simultaneously receiving solicitation calls and emails from inside salespeople at ambitious parcel auditing firms with a promise for savings ranging anywhere from 3% to 7% of shipping costs.
What gives? Where is the discrepancy between carrier service claims and auditor service claims? In hopes of shedding some light on the incredible discrepancy between carrier service reports, let’s think about these two drastically different claims made from 1) the major carrier’s perspective and 2) the tempting claims from sales people claiming to recover ‘free’ money without any work from the shipper.
The use of cutting edge technology has helped make the networks of parcel carriers (including regionals) nothing short of remarkable. Carriers employ thousands of people with sole the purpose of creating ways to further improve service and efficiency. The problems causing package mis-sorts, missed linehaul cuts, or any other list of service issues are quickly identified by engineers and carriers move quickly to repair the underperforming segments into a more efficient operation than the other service centers. Carrier service is good and only getting better with each passing day.
Most parcel auditing company’s’ claims paint a much different picture. Many overly ambitious salesmen compete mainly by exaggerating claims including “XYZ auditing firm finds more than any other auditing firm”, or that “Typical savings range anywhere from 5% to 7%.” While it is likely that all auditing firms have found more than another firm on an instance, or found an abnormal recovery period, neither is the norm for the parcel auditing industry. If any carrier terminal or service center operated at a 93% or 95% on time delivery rate, people would lose their jobs until the target service levels were restored.
How important is parcel auditing? Most shippers audit their invoices. At the most recent Parcel Forum 66.7% of respondents reported they utilize a third party auditing firm and 15.6% of respondents audit their invoices internally. The measurable result of small parcel auditing on a company’s shipping costs will be greatly determined by its package characteristics. If you utilize more expedited shipping services, you will experience a greater failure rate than using ground services. For ‘late shipment’ package auditing, shippers may want to temper their expectations without selling the exaggerated claims of savings to upper management.
The largest benefit of parcel auditing for many shippers is not only in the processing of late shipments, but having access to data. If the only strategy is to review weekly invoices, companies are missing a tremendous opportunity. Too many auditing firms merely review online bill on a weekly basis to find late shipments, and ignore treasure trove of information which is available when accessing all of shipping data (across all carriers) in real-time.
Auditing is an important tool to provide visibility and ability to fix broken processes. As supply chain strategies become more automated and advanced, shippers will require more from their auditors than simply processing of Guaranteed Service Refunds (late shipments). Tomorrow’s real-time Audit will truly transform how you monitor and control your entire supply chain and will yield greater results, which will be critical in future, particularly as carrier networks become stronger and more efficient.
Brad Hollister is the Executive Vice President of ClearView Audit, a cutting edge Technology company located in Madison, WI which specializes in shipping execution, auditing, and analytics across all modes of transportation in real-time.
